Company valuation is an art not a science Essay

Company valuation is an art not a science - Essay Example There are several rationales for mergers. Companies undertake M/A because of (a) synergy created by operating and financial economies, differential efficiency, or increased market power; (b) tax considerations; (c) purchase of assets below their replacement cost; and (d) diversification, not to mention possible managers’ personal incentives. For any of the four economic reasons mentioned, the M/A is successfully undertaken only if the resultant post-M/A firm attains a value greater than sum of the two separate firms (Brigham and House, 2004, p.796-798). A M/A is necessarily a sale or exchange, which means that the determination of company values is a requisite. There are various methods of valuation that may be undertaking for the purpose of M/A. These include assessing the target or merging companies’ book value, economic value, replacement value, and break-up value. The book value is the accounting value, that is, the net amount of the company’s total assets less total liabilities; the per-share value is arrived at by dividing this net amount by the number of common shares. As conveyed by its definition, the book value of a company is a straightforward valuation method based on historical transaction costs. The dividend-discount model, the most popular equity valuation method to determine the worth of the firm to the shareholders, is equal to the present value of all future cash dividends. This would prove useful to a company contemplating a financial merger that did not involve unifying operations. The target company is expected to conduct its business in the same way it has before the merger or acquisition, and the acquiring company expects to benefit in the nature of a majority stockholder (Helfert, 2003, pp. 390). The replacement or reproduction value is the amount that would be required to replace an existing fixed asset in kind. Replacement value is one

Employees Performance Appraisal Coursework Example | Topics and Well Written Essays - 1000 words - 1

Employees Performance Appraisal - Coursework Example Potential appraisal is the evaluation considering the personal qualities of the employee like his communication skills, leadership qualities, and commitment. It is different from performance appraisal in that performance is something that has happened in the past while potential abilities are those that an employee might possibly possess that can be enhanced to improve his performance in the future. The goal here is to make the employees aware of their potential prospects in future and to enable the organization to plan out management succession strategies. Potential appraisal helps the organization to lay out training and recruitment programs so that employees’ job opportunities can be increased. Question 2 The main goal of potential appraisal is to make the employees aware of their career development so that they have a clear vision about their future prospects. When the employees know which personal qualities they posses and which they need improvement in, they actually get a clear outlook on their personal haves and have-nots and this helps them build their capabilities through training sessions and motivation programs. They come to know how much confidence they possess; how good they are in decision making and problem solving; how they handle workplace stress; how independent they are; and, much more. This aids their career development and thus their future becomes bright with regard to their job. An employee can himself ask for an assessment of his potential qualities if he wants to be promoted or transferred. Otherwise, the company conducts this assessment to know if there is a need for training or motivation, and whether a certain employee should be assigned higher level responsibilities or not. This assessment may be conducted through different methods: self-appraisal, superior-appraisal, peer-appraisal, or role playing, are all methods conducting potential appraisal. Hence, potential appraisal is very future oriented and focuses on the career d evelopment of the employee. Question3 It is the manager’s responsibility to make sure that it is in the organization’s policies to include potential appraisal as a part of performance appraisal program. A line manager is assigned to conduct potential appraisals. A mutual understanding between the manager and the appraisee is important which can also build up during meetings between the two. It is the responsibility of the manager to gain information about how to conduct the appraisal process properly because if he does not have enough experience conducting potential appraisals, then he might end up showing negative cascaded attitude toward the process and telling that appraisals are a waste of time. This negative attitude then goes down among the appraisees as well and then the whole bunch of employees or teams of employees start possessing the same attitude. Thus, a manager’s role is very important because he portrays the attitude of the overall workforce. Also , a manager should maintain a written record of all potential appraisals and must make sure that all the capabilities of employees are judged properly without any bias. Since the manager better knows about the employees’ qualities and much more that is not explicit, his responsibilities increase when it comes to the future prospects and career development

Managerial Economics - Oligopoly Essay Example | Topics and Well Written Essays - 1250 words

Managerial Economics - Oligopoly - Essay Example This act of Holland Sweetener amounted to an attempt to dilute the monopoly and convert the US market into an oligopoly comprised of two major suppliers of Aspartame. In order to do this the major issue presented in the case study is that of pricing. Strategic pricing in order to win the major buyers so as to capture market share and maximize profits. Given the usual assumptions of an identical product, identical costs and the Bertrand variety of oligopoly in which the both Monsanto and Holland Sweetener simultaneously decide to quote the price either as high or low to Coke and Pepsi. Due to interdependence of the two sellers it becomes very important for each firm to decide strategically whether to quote a low or a high price. In Bertrand oligopoly strategy reduces to simultaneously setting prices in the hope that the competition does not change its set price. Such conflicting or non cooperating pricing strategies are increasingly being dealt with the constructs in Game Theory which not only introduced the idea that conflict could be mathematically analyzed but also provided the terminology with which to do it. Rasmussen (2001) traces the beginning of the theoretical development in field by quoting the relevant literature and by stating that the evolution of the arguments around the "Prisoner's Dilemma" construct (as in Tucker) and thereafter Nash's papers on the definition and existence of equilibrium further developed the field of the modern non-cooperative game theory. However important and simultaneous developments were taking place in cooperative game theory through the important contributions of Nash and Shapley on bargaining games and Gillies and Shapley on the core theory utilized in study of cartels. These developments are traced in several books on economics and Game Theory. (Thus if each firm acts independently, the result is a Nash equilibrium. Part of the definition of Nash equilibrium is that each player takes what the other players are doing as given when deciding what he should do; he holds their behavior constant and adjusts his to maximize his gains. But if one firm increases its output, the other firms must adjust whether they choose to or not. If they continue to charge the same price, they will find that they are selling less; if they continue to produce the same amount, the price they can sell it for will fall. The pay-off matrix from the case study can be given as in Table 1 below: Table 1: Pay-off Matrix of Monsanto and Holland Sweetener In this table Monsanto is represented as Player 1 and Holland Sweetener as the player 2.As per the assumptions the payoff have been categorized in various cells of the matrix. Player 1- Monsanto (Figures in $ Millions) Player 2- Holland SweetenerAn examination of the Table 1 reveals that following an independent strategy of pricing high Monsanto is likely to gain $300 million if Holland also priced high.However, its payoffs would plummet to $0 millions if

The Changing World of Work Research Paper Example | Topics and Well Written Essays - 750 words

The Changing World of Work - Research Paper Example In the last ten years, jobs have been outsourced in large numbers and a dramatic change has occurred in the location and method of work. Another key driver of the modern and more importantly, the future age is diversity in the workplace. The transformation of the world into a global village has removed the cultural barriers. More and more people migrate to other countries every year for studies, work or both. This has made society multicultural in general and the workplace in particular. There is the diversity of age, gender, culture, language, ethnicity, religion and caste. All of these factors of diversity give rise to the variety of perspectives which are quite beneficial for organizations in the competitive environment, but at the same time, also expose the organization to a lot of risks. Some of the risks include racism and dysfunctional conflicts among the employees whereas benefits include larger market value because of a diverse population of customers. Managers have experien ced a significant increase in job responsibilities as they have to not only address the needs of the customers but also have to fulfill the increased demands of employees. According to (Heerden), research concludes that young employees fundamentally look for three things in the changing world of work. They are briefly discussed below: 1. Opportunities for learning and development: Young people seek jobs where work would be challenging, yet they want to be rewarded upon succeeding. Professional growth at work is the biggest attraction for young job seekers. People want to serve in different positions and perform different roles in order to gain maximum experience. 2. Selection in a renowned organization which would decide the career path: In order to keep employees satisfied and motivated for work, employers need to share their strategies with employees and explain to them how their strategies are consistent with the requirements of the business. Thus, employees need to be engaged in work for which the employee-employer rapport is extremely essential. 3. Flexibility in life: Having achieved a higher standard of living, one of the key priorities of all working people is to have increased control over their personal and social life. The conventional 40 hr week that has been so for long is now changing. People want the freedom of duty hours and employers often have no problem unless the work is affected. In today’s work environment, ways to communicate have altered a lot. The changing trends impact many industries and hence, the career plans. A look into the future: In light of the aforementioned preferences of employees in the work environment, the work environment in the future would be more complying with the employees’ desires as it has in the past. It is obvious that an electronic system would be increased in use in the future. Therefore, it makes sense to assess the future work conditions for employees keeping the electronic system into conside ration.  

Types of Market Research to Undertake Essay Example | Topics and Well Written Essays - 1250 words

Types of Market Research to Undertake - Essay Example The macro-environment involves interactions with technological, socio-cultural, political and economic factors that emanate from without the company’s setting. For instance, since the market for ice ball moulds faces competition from other companies, the following types of research are suggested to be carried out (Loudon et al, 2006, p8). Research will be carried out to determine the level of market penetration by the company and the likelihood of reaching the most remote prospective customer. By facilitating research for market penetration by the company and its competitors, the company will be ensuring that the current market share is maintained and stretched if possible. Research recommendations would give such policies as competitive pricing as well as an aggressive sales promotion for the Soccer Ball Football Ice Mold. The company will ensure that the market dominance is secured by meeting customers’ demand and preferences. Increase in customer orders will be targe ted for research to come with solutions some of which could include loyalty scheme introduction. The existing logistics and distribution networks can be assessed to provide alternative distribution techniques to enhance market development. Product development will be analyzed to determine if the name Soccer Ball Football Ice Mold is enough competitive as a brand name. Market diversification is also another channel to unravel market potential strategies. Research recommendations would give such policies as competitive pricing.

The globalisation of trade Literature review Example | Topics and Well Written Essays - 5000 words

The globalisation of trade - Literature review Example For example, Starbuck was one American company which had coffee shops virtually in every corner of America before the introduction of globalization. Since their operations were saturated in America, they struggled a lot to find enough space in America for expansion. Globalization helped them to expand their operations to overseas countries. In short globalization helped international or cross cultural trade to increase a lot. Globalization of trade brought many opportunities and challenges. Some people argue that international trade helped countries to attract more foreign direct investments so that their economy started grow rapidly. They cite India and China like countries as examples to show how well a country can utilize globalization opportunities. In fact China opposed the â€Å"global economic order, political order and the major global institutions such as the IMF and the World Bank before the reforms started in China† (Overholt, 2005, p.3). However, they quickly reali zed the possibilities of global trade and globalization. It should be noted that these two most heavily populated countries in the world have been struggling for growth before the introduction of globalization. Their huge population size was a curse or barrier in front of their struggle for growth. However, globalization helped these countries to convert this population barrier into a blessing. In other words, these countries are currently the providers of manpower for international market in which manpower shortage is a big problem. â€Å"During 1997–2005, China’s average annual growth rate in real GDP was 8.9%. During the forecast period of 2005–2010, it was assumed that the PRC continued its historical growth trend of 8.9% per year† (Mai et al, 2010, p.5). Moreover, â€Å"the PRC’s exports increase by about 46%and imports by about 45% relative to their respective baseline levels in 2010†(Mai et al, 2010, p.7). According to Albert Keidel ( 2008), China’s economy will surpass that of the United States by 2035 and be twice its size by midcentury (Keidel, 2008). Indian economy also showed similar trends during the last few decades as a result of globalization of trade. The globalization of trade has assured the place of multi-national. It has been suggested that the role of such firms is to generate wealth, create work and raise the standard of living in the countries in which they operate. However, critics of globalization suggest that multi-national companies often exploit physical resources and take advantage of labor in countries where legal requirements may be less stringent than in their own countries. This paper critically discusses this statement providing arguments for and against the globalization of trade, taking India and China as major examples. Overview of economic growth in India and China It is often said that global wealth is currently shifting from the less heavily populated American and European regions to the more heavily populated Asian region because of globalization. The above argument seems to be correct when one would consider the economic statuses of India and China before the introduction of globalization. The standard of living and per capita income of Indians and Chinese people have increased a lot in the past few decades. Moreover, unemployment problems in these countries were come down a lot in the recent past. It should be noted that international

Andrew Ryan at VC Brakes Assignment Example | Topics and Well Written Essays - 750 words

Andrew Ryan at VC Brakes - Assignment Example The dictatorial tendencies, poor rapport in the various levels of management and mistrust from the workforce constitute the confounding issues the faces the implementations of the total management program. The paper utilizes the strengths, weaknesses, opportunities and threats as a management tool in order to analyze the case study effectively VC Brakes faced numerous issues emanating from its autocratic culture that dominated the firm’s operations (Cespedes and Yong, 2013, Pg. 2). In addition, VC Brakes had a reputation of poor top- down managerial skills and lack of trust from the production to the professional workforce who felt that the firm was unresponsive to their queries. The introduction of total quality management program by Crossroads Corporation was intended to improve the product quality, management practices and more so, to develop a consistent operational strategy that would be utilized across all sectors in the various subsidiaries found under VC Brakes.Questio n 1The major situation that faced Ryan involved the implementation of total quality management program that would raise the ailing quality productivity at VC Brakes. The autocratic culture evident in VC Brakes is depicted in various situations in the case study of instance, the emphatic condensation of the training sessions. (Cespedes and Yong, 2013, Pg. 6).   The notion would have amassed numerous achievements if it had gone through the initially specified time since it could have provided ample time.